Below is the first year performance for Amber Electronics. Actual Year 1 Income Statement Sales Cost of Goods Sold $1,000,000 $700,000 Gross Profit $300,000 Depreciation Expense ($15,000) Other Operating Expenses ($185,000) Operating Profit $100,000 Interest Expense ($30,000) Income before Taxes Income Taxes Net Income $70,000 ($30,000) $40,000 Amber Electronics management is preparing a forecast for year 2. They make the following assumptions when forecasting. Sales are expected to increase by 100% Net property, plant, and equipment will increase from $300,000 to $700,000. Loans payable will increase from $300,000 to $400,000. a. b. C. d. e. f. The income tax rate will increase from 42.9% to 60.0%. Gross profit percentage will increase from 30% to 32%. Other operating expenses as a percentage of sales will increase from 18.5% to 20.0%. Depreciation expense in year 1 was determined using 20-year straight-line depreciation of net property, plant and equipment. Assume Amber uses the same depreciation method for year 2. Assume the same in- terest rate in year 2 as in year 1. Prepare Amber's year 2 income statement forecast. Actual Budgeted Income Statement Year 1 Year 2 Sales $1,000,000 Cost of Goods Sold $700,000 Gross Profit $300,000 Depreciation Expense ($15,000) Other Operating Expenses ($185.000) Operating Profit $100,000 Interest Expense ($30,000) Income before Taxes $70,000 Income Taxes ($30,000) Net Income $40,000 April 9, 2015 09:40 AM Ich Fix: FINALEX/181821211810.docx